How does the Coronavirus affect the manufacturing of PCB in China, Asia and Europe?

Guro KrossenCommunication Manager

Update 02.04.2020

What caused the freight delays?

Flights cancellation and airport closure. About 50% of airfreight is on passenger flights, the rest on chartered. Total capacity of air freight is greatly affected.

Trucking limitation across borders in Europe.

Manpower shortages at shipping hubs in Europe.

Manpower shortages for trucking in Europe.

Longer waiting time across borders in Europe due to additional health & security checks.

What have we done to reduce the impact of delays due to the reduction of worldwide air freight capacity?

For our air freight shipment from China to Europe, we have rerouted them to go through Hong Kong.

For our consolidated shipment, we are breaking them down into smaller consolidation in order to facilitate speedier queue to uplift.

We are sending out from the factories 14 days in advance if it is completed ahead of schedule for small volume orders in order to get into the shipping queue.

Update 24.03.2020

Raw Material/ Production Lead Time We have seen some increase in raw material lead time as most factories resume close to normal capacity. Demand for raw material increase, as factories are clearing backlog and new orders after the long shutdown. Overall lead time is extended. Speak to your respective CM and plan for earlier release of your orders. As production capacity is scarce, do not pin your hopes on pull-in, when you release your orders late. Chances are slim and you might end up paying much more than just holding inventory earlier.

Air Shipment Lead Time Affected Due to many international flights being cancelled. The air freight turnaround time is affected. Deliveries to some European countries will be delayed for 2-3 days. The situation is very volatile as new travel bans and flight schedules continue to be updated. Please plan your production schedule with some buffer days, or order in advance. We are working closely with our freight forwarder to ensure we capture as much air space as we are allowed.

Customers’ Factory Shutdown Please provide us with you temporary shutdown dates and plans, to allow us to suggest how to handle your existing orders. If no temporary shutdown plan is provided, then we will place all your orders on hold. Lead time for the completion of your orders will stop and continue when your factory is reopened. We appreciate your openness to discuss the situation with us. We understand it is a challenging situation and we are here to support you. Please reach out to your respective Elmatica Country Manager to discuss how to best proceed.

How will lack of raw material affect PCB, and what can I do with my orders? As the situation of reduced production output not only impact to PCB Manufacturers, the raw material manufacturers such as for laminates and chemicals are also facing the same problem. We strongly advise that you should place orders early in order to secure production priority and material availability. We anticipate that raw material supply will also start to strain in the coming months when inventory on stock depletes and when PCB manufacturers recover from the low production output.

How is the current situation:

Update 13. 03. 2200As the situation of reduced production output not only impact to PCB Manufacturers, the raw material manufacturers such as for laminates and chemicals are also facing the same problem. We strongly advise that you should place orders early in order to secure production priority and material availability. We anticipate that raw material supply will also start to strain in the coming months when inventory on stock depletes and when PCB manufacturers recover from the low production output.

The Coronavirus has affected the global supply chain and consequently the PCB industry since the beginning of January and the safety and health of our colleagues and partners is our number one priority. As of today none of our colleagues in China has been infected by the Coronavirus. They are all working from home, until further notice, to reduce the risk of contamination, travel restrictions and a general lack of transportation options in relation to returning. Our colleagues in China daily report their status and the situation is monitored by the Elmatica Officer Group.

Elmatica follows the recommendations from the Central Chinese Government regarding the quarantine period, and the respective health institutions in each country. Meaning that all factory visits in China, or suppliers visiting our office in China, is suspended until further notice.

What is Elmatica doing to support its customers?It’s in times like this, it is an advantage to be within the supply chain one of the most experienced actors in the market. With manufacturing partners with a global footprint, we have the ability to handle these circumstances within our supply chain, offering plus 20 non-China suppliers for critical orders.

Both raw material- and PCB manufacturers are working on their backlog from the CNY and the backlog from the extended shutdown due to the Corona virus and a lower than normal production capacity due to travel restrictions and consequently a lack of people in the factories.

The result of this is delays, which will continue on a small or larger extent for an estimated 4-20 weeks.In times like these one need to take a step back, look at the production and demand in total, prioritize ones orders and remember that this is a situation affecting our global supply chain.

Operational manufacturing situation in China:All of our suppliers have reopened their factories, however they are still not running with full manpower or capacity, the average capacity is between 60-70%.

Meaning production is still not running with full shifts, a fact that also effects RFQ and Tooling handling with limited capacity. We are in daily communication with the manufacturers to get the latest updates and to prioritize orders.

How are the factories solving the limitations in manpower?What the factories are doing is to consolidate the manpower to operate within the same shift. For example a factory that normally runs 2 or 3 shifts, will now only run 1 shift. Some factories which have been doing cross training of employees, can now put them into use, as the operators are able to switch and support processes which require less manpower.

A longer lead time for production and feedback is expected to continue, factories have accumulated about 4 weeks of backlog due to CNY alone.

Factories in Wuhan and Hubei region remain closed.

Shipment:Currently logistics out from China is still a challenge. Trucking companies report a lack of manpower and also restricted cross cities traveling, lead time has consequently further increased.

Due to limited workforce and cross city travel restrictions, frequency of trains from China to Europe and intercity travel in China has been substantially reduced. There is also in general a reduced frequency of rail freight to Europe. Rail shipments for the month of February and beginning of March have been suspended. However, we are resuming our Rail Freight for schedule leaving China at the end of March. We can also assist you to switch shipping method for your critical orders to Air Freight or Sea Freight going out via Hong Kong.

We recommend our customers to switch to air freight going out via HK and temporarily not to plan for rail freight unless time is no issue.

Manufacturing situation outside China:As a global PCB-partner with several audited and approved manufacturers in our portfolio, we can offer our customers with an urgent demand, or articles that can be transferred to other suppliers, a non-China alternative, like Taiwan, Singapore, South Korea, Japan, US and Europe.

Europe:Time is a crucial factor for many products and there is still free capacity in Europe, but at some point, also the manufacturers in Europe can reach their max capacity.

Another factor to keep in mind is that many laminates for PCBs are produced in China and if shipping restrictions continue, the result can be that there will be a lack of material for PCB production. Resulting in longer lead times also in Europe.

SingaporeRestricted traveling by Singapore Government. People from China and foreigners who have traveled to China within the last 14 days are currently not allowed to enter Singapore. Residents who have travelled to China within the last 14 days are required to be quarantined for 14 days when they return to Singapore. This has affected some Chinese operators returning to Singapore after the CNY.

Our partner in Singapore has normal manpower capacity, they have implemented restrictions to limit unnecessary cross departmental physical interactions, reduced traveling and restricted travel to China.Most factories seem to operate as normal after the CNY holidays.

TaiwanNormal operations, some restrictions regarding access to certain areas to limit cross physical interactions among employees. All business travel has stopped. Our manufacturing partners operate as normal after CNY.

South KoreaCurrently affected cities are Daegu and Cheongdo. Our partners are located in Ansan city. The factories currently operate with normal capacity and manpower. Factories have implemented additional disinfection, employees are wearing masks and putting on hand sanitizer regularly.

How can I reach out to get information on my orders?Kindly work with your respective Elmatica Country Manager to prioritize your orders. By selecting those which are critical, we can prioritize production.

As much as we would like to complete all your orders and ship them to you immediately, we are not able to do that due to the limited capacity at the manufacturer. There is still a shortage of manpower and an accumulated backlog of orders in the pipeline.

If there still are critical orders which cannot be produced by our Chinese partners on time, you may speak with your respective Elmatica Country Manager for alternative production, outside China.

What is Elmatica doing for their employees security?

Update 10.03.20Due to the recent development of the Corona situation in Europe we are upgrading our precautions with these new procedures:

Place of Work

We strongly encourage all colleagues to work from home until further notice

Please inform your personnel responsible of your plans

If you come to the office

Try to arrive by method of transportation to reduce social interaction

We encourage you to limit public transportation during rush hours

Order food to the office or have one person pick up the lunch for everybody

The Elmatica team based in China is working from home, to reduce the risk of contamination and due to travel restriction and lack of transportation available for return. They are reporting their status daily and followed up closely.

We encourage our colleagues to follow the recommendations of the respective health institutions in their country to e.g.

Regularly wash your hands

Cover your mouth and nose when coughing and sneezing

Avoid close contact with anyone showing symptoms of respiratory illnesses such as coughing and sneezing.

Use the provided hand disinfectors.

Use mask and gloves when travelling, if you feel more comfortable with it

If you feel sick or believe there is a chance you can be infected, contact your personnel responsible and work from home, avoid contact with others and keep us daily posted on your development.

What will Elmatica do regarding business travel?:The Elmatica Officer Group and Management Team monitor the situation day to day and will act to secure our colleagues’ safety, and prevent further infections. This is our main priority.Elmatica follows the guidelines of the respective health institutions, and has stopped all business trips to highly infected areas in accordance with the travel restrictions of the respective country.

We instruct our colleagues, which have travelled and feel sick or suspect they might me infected, to seek medical advice according to their national institutions and stay at home until they are healthy.

All factory visits, and suppliers visiting our office in China, are put on hold until further notice by the Officer Group. Travel activity, meetings and PCB related seminars shall be minimized until further notice by the Officer group

What is Elmatica doing to secure the delivery and inform the customers?Our Management and Officer team, meet regularly to discuss the latest development. A task group has been established, led by Elmaticas COO and Communication Manager.

Weekly updates are released internally and external towards customers.

Our COO, Raymond Goh is in daily contact with the management of our Asian suppliers, to get the latest updates, prioritize and negotiate capacity.

We encourage our customers to work with their respective Elmatica Country Manager to prioritize orders. If you have critical orders, we have partners outside China who may support, please speak to your respective Country Managers for more details.

We have updated our system with live tracking of order confirmation to our customers, so they can easily click a link and get an overview of all orders and their respective status.

Our Customer Service team continuously monitors all the orders and conveys any news to the customer, they also ensures that the link to the orders is updated.

The Customer Service department works closely with our Global Logistic partners to ensure that the shipping capacity is fully utilised, recommending our customers to switch to air freight going out via HK and temporarily not to plan for rail freight, unless time is no concern.

As much as we would like to complete all orders and ship them immediately, we are not able to do that due to the limited capacity at the factories. There is still a shortage of manpower and an accumulated backlog of orders in the pipeline.

What have we already learned from this situation?

All orders placed at a manufacturer should be changed to “unconfirm” when a Force Majeure situation occurs. The orders should then continuously be updated as we receive more information.

A second source option should be offered as quickly as possible for those customers requesting it.

Is it safe to receive goods from an area where Coronavirus has been reported?Yes. The likelihood of an infected person contaminating commercial goods is low and the risk of catching the virus that causes COVID-19 from a package that has been moved, travelled, and exposed to different conditions and temperature is also low. (WHO)

WHO – site on Coronavirus: https://www.who.int/emergencies/diseases/novel-coronavirus-2019https://www.who.int/emergencies/diseases/novel-coronavirus-2019 https://www.cdc.gov/coronavirus/about/prevention.html